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dc.contributor.authorCORSETTI, Giancarlo
dc.contributor.authorMARTIN, Philippe
dc.contributor.authorPESENTI, Paolo
dc.date.accessioned2008-01-24T10:57:14Z
dc.date.available2008-01-24T10:57:14Z
dc.date.issued2008
dc.identifier.issn1028-3625
dc.identifier.urihttp://hdl.handle.net/1814/7871
dc.description.abstractMost analyses of the macroeconomic adjustment required to correct global imbalances ignore net exports of new varieties of goods and services and do not account for firms'net entry in the product market. In this paper we revisit the macroeconomics of trade adjustment in the context of the classic 'transfer problem', using a model where the set of exportables, importables and nontraded goods is endogenous. We show that exchange rate movements associated with adjustment are dramatically lower when the above features are accounted for, relative to traditional macromodels. We also find that, for reasonable parameterizations, consumption and employment (hence welfare) are not highly sensitive to product differentiation, and change little regardless of whether adjustment occurs through movements in relative prices or quantities. This result warns against interpreting the size of real depreciation associated with trade rebalancing as an index of macroeconomic distress.
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.ispartofseriesEUI RSCASen
dc.relation.ispartofseries2008/01en
dc.relation.ispartofseriesPIERRE WERNER CHAIR PROGRAMME ON MONETARY UNIONen
dc.rightsinfo:eu-repo/semantics/openAccess
dc.titleVarieties and the Transfer Problem: The Extensive Margin of Current Account Adjustmenten
dc.typeWorking Paperen
dc.neeo.contributorCORSETTI|Giancarlo|aut|EUI70002
dc.neeo.contributorMARTIN|Philippe|aut|
dc.neeo.contributorPESENTI|Paolo|aut|
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